Kim Sees Job Cuts at World Bank in Effort to Lower Spending

By Alaa Shahine and Sandrine Rastello -
Oct 10, 2013

World Bank President Jim Yong Kim
said he expects to cut jobs at the lender as he seeks to reduce
costs.

“There are going to be staff reductions,” he said in an
interview with Sara Eisen on Bloomberg Television in Washington
today. “But we’re not going to do it on the base of any number.
We’re going to look carefully at every part of the World Bank.”

After shaking up the Washington-based lender’s management
and organizational structure, Kim is due to submit a strategy
this week to its 188 member countries for meeting the goals of
ending extreme poverty by 2030 and boosting incomes for the
world’s poorest 40 percent.

The bank has about 15,000 employees, and distributed $53
billion in financial aid to emerging and developing economies in
the last fiscal year.

Kim, appointed in July last year, said the possible job
cuts would be the first attempt to examine the World Bank’s
structure in 17 years.

Lowering Costs

Kim said in the interview the banks planned to cut “a
minimum of $400 million a year out of the budget over the next
three years.”

In a separate interview, Chief Financial Officer Bertrand Badre clarified that the goal is to reduce the bank’s annual
costs to $4.6 billion after three years, compared with $5
billion now. That could affect spending on areas from travel to
real estate, he said in a phone interview.

“As we do that, we’re going to look at every single
position and say: Are the people doing this job really
contributing to our mission of ending poverty,” Kim said.

The headcount will be lowered in part through attrition,
Badre said.

Kim’s draft strategy suggests lowering costs to strengthen
the lender’s finances and the transformation of the bank’s
financial model to make it more sustainable, including a
“right-sizing exercise” and more selective spending on grants.
It also recommends the bank better recoup expenses when
providing stand-alone services that aren’t attached to loans.

Debt Ceiling

His comments come as the world’s finance chiefs gather in
Washington for the annual meetings of the bank and the
International Monetary Fund amid concerns over the U.S. debt
ceiling and the Federal Reserve’s plan to scale back stimulus
measures.

“I just want to make it clear to policy makers here in
Washington, that whatever you do, please think about the impact
that this is going to have in developing countries, for women in
South Asia who are trying to grow rice, or young people in the
Middle East,” Kim said.

He also urged emerging-market economies to carry out
necessary “reforms” to reduce the effect of the possible
reduction in U.S. stimulus by the Federal Reserve. In a press
conference earlier, he said countries have a “two or three
months’ window” to implement those.

An increase in interest rates for emerging markets after
the Fed first announced plans to cut back its bond purchases
revealed “all the weaknesses in the emerging-market
economies,” he said. “The message we’ve been sending to the
emerging markets is: now is the time to undertake the reforms
you’ve been promising.”